Why US may be ready to resolve Feta dispute to clinch trade deal with EU

Next month, the European Union and the United States will likely resume their negotiation of the Transatlantic Trade and Investment Partnership (TTIP). This ambitious and far-reaching agreement will affect not only two of the world’s largest trading powers, but also other members of the international community.

One area that has tripped up these high-stakes trade talks concerns the labeling of cheese and other foodstuffs. In many countries, specific laws exist to protect what is generally referred to as “geographical indications.”

These indicators identify the geographical source from which a product derives its essential quality, reputation or other characteristics. Examples include Champagne sparkling wine, Scotch whisky, Feta cheese, prosciutto di Parma, Café de Colombia, Idaho potatoes and Darjeeling tea.

Thus far, the EU and the US disagree over how these indicators are to be protected. Greater protection will affect not only product labeling but also exports and jobs.

Although these two trading powers are unlikely to resolve their disagreement soon, the US may be more willing to increase protection of geographical indications than many expect.

The TTIP still faces an uphill battle, but resolving the fight over geographical indications should give it a push.Reuters

The fight between Old and New Worlds

Historically, the protection of geographical indications has been the subject of heated debates and controversy among members of the international community.

Countries in the “Old World” – primarily those in Europe – advocate for strong protection of geographical indications. They remain concerned about their consumers being confused as to the origin and unique qualities of the products identified by these indicators. They also argue that unauthorized use will tarnish the indicators' established reputations while diluting the products' authenticity on the international market.

By contrast, countries in the “New World” – such as Australia, Canada, Chile and the US – oppose strong protection of geographical indications. They contend that most products can be replicated almost anywhere today, thanks to modern agricultural and manufacturing techniques.

They also claim that several geographical indications – such as Champagne, Feta and Gouda – have long become generic terms on their soil. In some cases, names similar or identical to these indicators have already been registered as trademarks. A prohibition on the commercial use of geographical indications – such as using Champagne for sparkling wine not made in that region of France – would therefore damage businesses while creating consumer confusion.

Cognac is one of the relatively few foods offered some geographical indication protection.Cognac glass via www.shutterstock.com

Growing international protection

Since 1994, the so-called TRIPS Agreement of the World Trade Organization (WTO) has introduced international minimum standards for the protection of geographical indications. The WTO also offers expanded protection to wines and spirits.

In addition, other multilateral and regional efforts have been undertaken to protect geographical indications. A case in point is the Lisbon Agreement for the Protection of Appellations of Origin and Geographical Indications. Despite the continuous differences between the Old and New Worlds, the scope of this agreement was recently expanded at the World Intellectual Property Organization in Geneva.

Thus far, the US has not offered independent protection to geographical indications. Instead, it allows these indicators to be protected as trademarks, certification marks or collective marks.

For instance, Brunello di Montalcino, Cognac, Darjeeling and Jamaica Blue Mountain coffee are all currently protected as certification marks in the US. Federal and state laws also offer additional protection to appellations of origin for wines.

Vintners in Napa Valley have been among those arguing the US should adopt geographical indications.Napa Valley via www.shutterstock.com

The slowly evolving US position

Although the US has a longstanding skepticism toward protecting geographical indications, at least five reasons exist to suggest the country’s increasing willingness to strengthen protection in this area.

First, the protection of geographical indications has already received growing support from US industries. Napa Valley Vintners, for example, has strongly advocated for such protection on behalf of its member wineries. In 2007, this trade group successfully secured protection for “Napa Valley” as a US geographical indication in the EU.

A 2013 industry study also provided a long list of potential US geographical indications. This list included not only well-known wine-producing regions, but also lesser-known regions such as Alexandria Lakes in Minnesota, the Bell Mountain in Texas, the Kanawha River Valley in West Virginia and the Old Mission Peninsula in Michigan.

Second, in addition to the TTIP, the US continues to negotiate bilateral and regional trade agreements with countries that have offered strong protection of geographical indications. During these negotiations, compromises on how to protect these indicators will inevitably be reached. Indeed, many US free trade agreements already include provisions addressing the potential conflict between the trademark system and the protection of geographical indications.

Third, stronger protection of these indicators would offer significant trade benefits to US exporters. Such protection would harmonize labeling standards while reducing marketing costs. If US products are of recognized qualities or reputations, enabling foreign consumers to quickly select these products would also enhance sales.

After all, the US, like Europe, has its own geographical indications. These indicators include Idaho potatoes, Florida oranges, Vidalia onions, Napa Valley wines and Washington State apples.

Fourth, greater protection of geographical indications would benefit US consumers by enabling them to purchase authentic products locally. Many Americans now travel abroad and have a better understanding of foreign cuisines and cultures. After tasting Parmigiano-Reggiano in Italy or sipping Darjeeling tea in India, they would certainly appreciate finding the same products in home grocery stores.

Is that really Champagne, Mr President?Reuters

Finally, European countries and industries continue to shame the US into offering stronger protection of geographical indications. In January 2013, for instance, the champagne lobby strongly protested the listing of “Korbel Natural Russian River Valley Champagne” on the menu of the inauguration dinner for the second term of the Obama administration. As the lobby’s spokesperson emphatically declared, “Champagne only comes from Champagne, France,” not Sonoma County in California.

In sum, although the US is unlikely to volunteer to strengthen protection of geographical indications, it may be willing to do so if the EU offers the right concessions in other areas of trade or investment. Thus, the TTIP negotiations – despite the ongoing challenges – can serve as an important platform for the two trading powers to narrow their differences.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.